Online Leads: An Informal Q&A with ServiceMagic

No online lead-generating service is as big or as widely used as ServiceMagic, and none is as divisive among remodelers, either. To address some of remodelers’ most frequent misgivings toward the Internet lead giant, we posed a few questions to David Lupberger, ServiceMagic’s home improvement expert and formerly a high-end remodeling contractor.

Remodelers’ comments and questions are paraphrased from various sources, including phone and email interviews, and conversations on online forums. Lupberger’s responses are mostly taken verbatim from conversations and emails with him, and occasionally paraphrased. For links to eight brief audio tips from him, scroll to the end of this article.

(Click here to see “Make Me a Match,” which appeared in the December issue of Remodeling. Scroll to the bottom of this article to link to eight brief audio clips of tips provided by ServiceMagic. Editor’s note: Hanley Wood, publisher of Remodeling, has a business relationship with ServiceMagic.)

Remodeler: “Junk! Stay away! Rip off! That’s my opinion after using some of these lead-generating services, especially ServiceMagic.”

Lupberger: “We recognize that many remodelers have had less-than-stellar relationships using ServiceMagic. When they hired me three years ago, they didn’t understand how important relationships are in the remodeling business. SM was built on technology, not on personal relationships, and the two have a different set of metrics.

“One of my main priorities has been to strengthen SM’s sales training and transparency. I try to convey to contactors that you’re getting the contact information for a homeowner who is asking for help. That’s all. It is important to understand the distinctions of the online shopper: Some are buying, some are still shopping, some are looking for inspiration, and some are just engaging in wishful thinking.

“The long-term asset to contractors is that these are potential customers in targeted service areas that you can follow-up with in the future. This is the real benefit I want to communicate with contractors. This is the basis for being successful with online leads.”

“Whether the lead is ready to remodel now or just thinking about it, their contact information has value. It’s up to you to be as specific as possible about the leads you want – the job types, the zip codes – and to follow up quickly with the leads you get.”

Remodeler: “When I call some leads, they say they’ve already been deluged by 10 contractors! Or they have no idea of what something might cost, or sometimes they don’t even exist.”

Lupberger: “As more and more people use the Internet, contractors need to learn the distinctions of online customers. With the Internet, customers are in control. They decide when they want to talk to you.

“Your job now is to target the areas where your demographics match your best customers. Be specific. Choose from 500 different categories. Pick the zip codes you want to serve. The consumer will answer 8 or 10 questions, and plug in a zip code, and literally within 45 seconds, you will receive their information. Act quickly.

“We never send one category response to more than four professionals. The problem is that when homeowners specify that they want a general contractor, and a plumber, and a cabinet guy, we may sell their information to four companies in each of those categories.

“Even if that person isn’t ready to remodel now, or has heard from other contractors, does he or she still have value for you? Yes, if you can build relationships online. Capture their information into your database; you can download every lead you receive onto an Excel spreadsheet. Stay in touch with them: say, in two weeks, send them your kitchen checklist, and in three months send them your fall checklist, and so on.

“It’s marketing 101. Ninety percent of contractors do not systematically follow up with leads. Even if someone isn’t ready to work with you now, they very well may want to work with you later.”

Remodeler: “You hijacked my website. I signed up with ServiceMagic, then cancelled my membership, but I’ve learned that homeowners doing searches sometimes get my company name and SM’s phone number. And I get charged for the lead.”

Lupberger: “When a contractor signs up for ServiceMagic, they are screened and approved and can receive leads in two ways. ‘Market Match’ connects consumers to pros when they do not have a specific company in mind – and to no more than four pros.

“The second way, ‘Exact Match,’ connects consumers to the specific SM professionals they have chosen. The consumer chooses how many professionals they wish to speak with – again, no more than four pros…. In this case, your company will be promoted as the sole provider for your selected specialty, such as painting bathroom tile.

“Almost 97% of SM members say ‘yes’ to Exact Match leads when they sign up for membership because it gives them contact with a homeowner who has chosen to speak with them. If a Market Match lead is $20, then the Exact Match lead priced 50% higher, or $30.

“As for ‘hijacking,’ the problem seems to be this: if a contractor leaves SM as a member, it can take several days or weeks for our online partners to remove your sponsored link. We work with online partners to promote your services. See next question, please.”

Remodeler: “Sponsored links? Your online partners?”

Lupberger: “ServiceMagic can make Exact Matches because we spend millions of dollars purchasing keywords – the words that homeowners use to find help with the projects they want done. In a sense, sponsored links are the new ‘yellow pages’ and are how Google and Yahoo make most of their income. Our role is to create exposure for our members, and buying keywords is a primary driver of online traffic.

“We have approximately 50 online partnerships with content providers that help facilitate contractors getting connected with homeowners. This exposure gives our members such high placement when homeowners perform keyword search queries. We pay for this exposure through paid channels of online content providers like Google, Superpages, Yahoo, Citysearch, and MSN.

“In regards to the complaint about getting charged for the lead, the contractor is only charged if they are a member. If they are not a member, there is no fee. One more note – if a contractor leaves SM as a member, it can take several days or weeks for that sponsored link to be removed. While we give updated information to our online partners, changes don’t always take place immediately.”

Remodeler: Why can’t I find out a homeowner’s budget range or spending ability before I buy their lead?

Lupberger: “There is no budget range because we have found that with that initial questionnaire, most homeowners are not comfortable sharing that information, or they really don’t know. We are continually tweaking our homeowner interview questions for larger projects like remodeling.”

Remodeler: “You’ve made unauthorized charges to my credit card and charged me for bogus leads. I want my money back.”

Lupberger: “When we learn that a lead does not meet our criteria for a ‘good lead,’ we will issue credit. To expedite the process and ensure we are able to reach the consumer, we generally require that a lead replacement request be submitted within 30 days of receiving the lead.”

“Also, consumers sometimes submit their project request incorrectly. This could result in an incorrect zip code or task being entered that falls outside the contractor’s defined profile. Or, it could be that the contact information submitted was incorrect. When this occurs, we will correct the request and issue a credit.

“However, as is true with all forms of advertising, not all consumers will move forward with the project and not all consumers will return calls to let the service professional know that they have hired someone else. We consider these to be good leads and do not issue credits in these cases.”

Remodeler: “What are your written credit guidelines for SM members?”

Lupberger: “Here you go:

“We will provide lead replacement for the following reasons:

• Duplicate leads (the same consumer submits two leads).

• A lead is submitted with the wrong zip code and does not match a zip code you are profiled for.

• A lead that is submitted under the wrong job type and the correct job type is not in your profile.

• A competitor is testing the system.

• All contact information provided by the consumer is wrong or disconnected.

“We give partial adjustments if a lead is submitted under the wrong job type and the correct job type is in your profile.

“We account for the following situations in our lead pricing. Therefore, they are not eligible for lead replacement:

• The consumer does not call you back.

• The consumer already found someone to complete the work.

• The consumer changed their mind.

• The consumer is just ‘shopping.’

• You did not win the job.

• You contact us more than 30 days past the date on which the lead was received.”

(Click here to see the original article from the December 2009 Remodeling, “Make Me a Match.”)